5/12/10

Charter Schools: Follow The Money

Wealthy investors and major banks have been making windfall profits by using a little-known federal tax break to finance new charter-school construction.

The program, the New Markets Tax Credit, is so lucrative that a lender who uses it can almost double his money in seven years.

In Albany, which boasts the state's highest percentage of charter school enrollments, a nonprofit called the Brighter Choice Foundation has employed the New Markets Tax Credit to arrange private financing for five of the city's nine charter schools.

But many of those same schools are now straining to pay escalating rents, which are going toward the debt service that Brighter Choice incurred during construction.

The Henry Johnson Charter School, for example, saw the rent for its 31,000-square-foot building skyrocket from $170,000 in 2008 to $560,000 last year.